The Enterprise System Spectator

Monday, June 22, 2009

Infor juices up its maintenance program value with Infor Flex

Infor announced enhancements to its software maintenance offerings today. The program, dubbed Infor Flex, allows customers at little or no license costs to upgrade to the latest, SOA-enabled versions of their Infor products or to exchange those products for other, newer products in Infor's portfolio.

I won't spend more time describing the program, as Infor has a good blog post on Infor Flex with embedded presentations. On balance, I would say it is a good move on Infor's part.

As I've written in the past, with its huge installed base, Infor has an opportunity to differentiate itself from its competitors in terms of its maintenance program. Many of its customers are on older legacy products, which Infor or its predecessor companies acquired over the past several years. Some of them pay maintenance, others don't. Most of them are going to do something in terms of new systems in the coming years. Infor has some decent up-to-date products in its portfolio, such as Baan and Syteline. But how can they compete against SAP, Oracle at the high end, or Microsoft, Lawson, IFS, and others in the mid-tier? The only way is to make upgrading or exchanging the customer's legacy products a no-brainer. This is what Infor Flex is intended to do.

It remains to be seen whether this program will succeed in moving significant numbers of its installed base to its newer products. On the one hand, I spoke to one early adopter of Infor's Open SOA products a couple months ago, and he was very positive about the experience. He also spoke well of Infor's maintenance and support services. This is a good sign and it says more to me than any number of vendor press releases and statements about future direction.

On the other hand, by my observation, Infor gets "outsold" by other vendors, even in situations where it is the incumbent supplier. Current economic conditions are likely limiting its ability to more aggressively and thoroughly present its leading products, such as Baan and Syteline. Hopefully, the new Infor Flex program will provide a more compelling value proposition, allowing Infor to win more deals where it already has a customer relationship.

I would like to see this program succeed. In these days, customers need more alternatives, not fewer.

Update: I see Vinnie has already posted his view on Infor Flex. Read Flex should also include down, not just up. Vinnie points out that the "flex" option is only for more product and services, not less. A good point, but Infor is reluctant to give customers an option to pay less than they're paying now. Of course, Infor is not alone in this reluctance.

Update: Dennis Howlett weighs in, in his usual style: curmudgeonly. Read the whole piece, at least to see how Dennis can manage a reference to Hulk Hogan when talking about ERP.

Friday, June 12, 2009

Infor buying SoftBrands, owner of Fourth Shift

Looks like the vendor consolidation trend in ERP is not yet over. Infor announced this morning that it is buying SoftBrands, for $80 million. Softbrands adds two new products to the 50+ ERP systems in Infor's wide-reaching portfolio of enterprise software.

SoftBrands may not be a well-known name, but one of the two products in its portfolio is better know: Fourth Shift, a Tier III ERP system that has been around for some time and has a fairly extensive installed base among small and mid-size manufacturing firms.

What's most interesting about this deal at first glance is that Fourth Shift has had a partnership relationship with SAP since 2004 to offer Fourth Shift as a small plant solution to SAP Business One customers. Business One is SAP's small company ERP system, which does not have extensive manufacturing system functionality of its own.

Whether SAP is going to be willing to extend this relationship with Infor going forward remains to be seen. SAP views Infor's installed base as a target for its own sales efforts, so a continued partner relationship with Fourth Shift may be awkward. Loss of the SAP relationship would no doubt be a significant loss to Fourth Shift, but Infor surely must have considered this risk already.

SoftBrands' other products are systems for the hospitality industry, which it picked up in 2006 with its acquisition of Hotel Information Systems (HIS).

Update, Jun 15. Jason Carter, in a series of Twitter direct messages to me, raises some interesting question: why didn't SAP buy SoftBrands? It would seem an obvious way for SAP to build out its functionality for Business One. If SAP wasn't in the bidding, what does that say about SAP's commitment to Business One? If SAP was in the bidding, why did Softbrands go with Infor?

Thursday, June 11, 2009

Gartner Mid-Market ERP Magic Quadrant: Should Have Stayed in Retirement

Back in 2007, I noted that Gartner had retired its mid-market ERP Magic Quadrant (MQ). As my source said at the time, the reason was that as a result of consolidation there were not enough vendors left in midmarket ERP to populate the quadrant.

Well, apparently Gartner found some more vendors and has now brought the mid-market ERP MQ back from retirement.

This is not meant as a slam on either QAD, Syspro, or Epicor, but how is it possible that QAD or Syspro in the current economy can have the "overall viability" to allow them to execute better than SAP or Oracle, with their fat maintenance revenue streams? And how is it possible for Epicor to have a better geographic strategy than SAP or Oracle? Gartner does not release individual scoring for each vendor for each factor, so perhaps it scored these vendors better on other criteria.

Nevertheless, my issues with Gartner's Magic Quadrant for Midmarket and Tier 2-Oriented ERP for Product-Centric Companies are several fold:

As indicated above, the positionings make no sense to anyone familiar with these vendors.

Gartner's criteria for evaluation are almost certainly going to be different from the criteria of a specific buyer. For example, if I run a manufacturing company with operations solely in the U.S, why do I care about worldwide geographic presence?

As a buyer, is "completeness of vision" really one of the two primary criteria in evaluation? How about fit to my functional requirements and industry? On this note alone, IFS and Lawson, with their industry-specific focus are being shortchanged in this version of the MQ.

The MQ is incomplete in terms of vendors. Specifically, as Vinnie Mirchandani pointed out in a private Tweet to me, Gartner has conveniently left out the pure SaaS vendors, such as NetSuite and Intaact, from this MQ.

Furthermore, the MQ does damage in the sales cycle as vendors are quick use the MQ in their sales presentations, if their position is favorable, with the implication that prospects ought to choose them because of it. First-time buyers, especially in small or midsize companies, may not understand the misuse of the MQ in this way.

To be fair to Gartner, the fine print at the bottom of its study says:

Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action.

Nevertheless, I think this MQ does more harm than good. In my opinion, Gartner should have left it in peace to enjoy its retirement.

Friday, June 05, 2009

Oracle layoffs, June 2009

Go to latest news on Oracle layoffs, November 2009.Based on the large number of search engine referrals to the Spectator this morning, it appears that another layoff is underway at Oracle. As it turns out, a surge in such hits in the past has been an early indicator of layoffs, as news spreads within the organization and people search for more information.

If you have information or more details on what functions are affected, and numbers of terminated employees, please post a comment to this post or email me. Anonymity is honored, as always.

Update, Jun. 10: I have just received confirmation on one point made by the second and third comments on this post. At least one Oracle sales rep here in Southern California has been laid off and replaced by someone working out of (get this) India. I'm not sure how an India-based salesperson is supposed to rep product in Southern California.

Wednesday, June 03, 2009

The downside of vendor consolidation

Consolidation is generally an excellent strategy for reducing the cost of IT while maintaining or even improving service levels. Server consolidation, storage consolidation, data center consolidation, and applications consolidation are all examples of strategies that organizations use to accomplish these objectives. Our research at Computer Economics on consolidation consistently points to strong return on investment experiences of organizations that undergo server consolidation, storage consolidation, data center consolidation, and applications consolidation.

Vendor consolidation may also be included in the list. Reducing the number of IT suppliers has a number of benefits: fewer contracts to administer and volume discounts are two obvious examples. But vendor consolidation has one big downside: risk of vendor lock-in.

The benefits of vendor consolidation are grossly overrated. Split your dollars across many vendors. Also, vendors often misinterpret long term relationships as license to pull lock-in shenanigans. Benchmark them constantly and refresh your vendor base periodically.

This is especially true in the case of enterprise software, such as ERP, CRM, business intelligence, and supply chain management systems. Once these systems are in place, it is very difficult to switch. Hence, enterprise software vendors promote the concept of vendor consolidation, with all of its benefits to the customer, realizing that it is also of immense value to the vendor that remains. Nowhere is this better seen than in the drive by major vendors, such as SAP and Oracle, in charging their software maintenance fees at 22% of original software license cost.

Larger firms especially have options. It is still the exception, rather than the rule, for large companies to standardize on a single enterprise software vendor. Most have two or more vendors, whether by design, or more likely as the result of mergers and acquisitions. What I am suggesting, which is contrary to conventional wisdom, is that there is some benefit to this situation. Rather than consolidate to a single vendor, rationalize the choices made and consolidate to no fewer than two.

There are several ways this strategy could be maintained. For example:

Consolidate to a single vendor for worldwide financials, but standardize operational systems on another vendor's platform. Always leave the option open to replace one with the other.

Consolidate to a single vendor for centralized CRM and order management, while allowing one or two different vendors to provide operational systems at the plant level, perhaps one for large plants and one for small plants.

Revive a best of breed approach. Leave HR, asset management, and other non-core systems outside the scope of the primary vendor's implementation.

Test vendors' touted SOA capabilities to build composite applications. If these capabilities really are what vendors say they are, they ought to allow "seamless integration" with third party applications.

Vendor consolidation does have merit in supplier relationships that do not lend themselves to vendor lock-in. Think supplies, such as laser printer toner. Or, temporary staffing. Or, equipment leasing.

But when it comes to enterprise applications, beware of vendor consolidation.

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision.
My consulting firm, Strativa, offers assistance that is independent and unbiased.
For information on how we can help your organization make and carry out these decisions, write to me.

My IT research firm, Computer Economics provides metrics for IT management, such as IT spending and staffing benchmarks, technology adoption and investment trends, IT management best practices, IT salaries, outsourcing statistics, and more.